Blockchain technology is one of the most talked-about technologies in recent times. Many experts believe that it could shape the future of businesses. Here, we take a look at how this technology is going to affect businesses and what steps need to be taken to make use of it.
In a few years, blockchain will be seen as one of the most important evolutions in business. It has been around for a decade but continues to evolve and can have an impact on many different verticals. In this article, I will provide a brief overview of what it is and how it works as well as highlight several uses cases that will help you better understand the technology.
What is blockchain?
While it might seem complicated at first, it’s actually quite simple. Blockchain is just a list of records, called blocks. Each block contains data, which can be anything from transactions to other valuable information.
They are all linked together with cryptography and timestamps that show the order in which the blocks were created and added to the chain. The list of records is then distributed among all participants in a particular blockchain, ensuring that every piece of data is safe and no block can be modified without others knowing about it.
Since each transaction requires verification from several different parties (nodes), altering any record would require redoing all the work done by others, which would take a massive amount of computing power. In the case of Bitcoin, this makes it almost impossible to change records without being noticed.
There are several types of blockchain networks out there but they all have the same underlying principles and rules when it comes to creating new blocks. For instance, in a public network, anyone can join and contribute to verifying transactions by solving a series of computationally exhausting problems. In a private blockchain, the makers decide who can join and who has what responsibilities.
Now that we have a basic understanding of how it works, let’s take a look at some real use cases that could potentially change everything from communication to transaction speed to data storage.
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How blockchain can revolutionize the healthcare industry
Blockchain technology could change medicine as we know it today. Fast and secure database access, transparent patient records, and unified health data structure are just a few things that blockchain could provide our doctors with.
- A company called Medicalchain is already developing a blockchain-based platform to improve medical records management.
- Civic is another blockchain-based project that could potentially change the way we manage our personal information. Civic would allow users to share their health data with doctors, insurance companies, or other medical service providers without worrying about identity theft or losing control of their personal information.
Blockchain can be used to prevent medical records from tampering and breaches. It would also reduce the need for third parties, which could save patients thousands of dollars each year. For example,
- According to IBM’s Vice President of Blockchain Technologies – Jerry Cuomo – the company’s research found that over $300 million were lost due to healthcare data breaches just last year.
- It is also estimated that 1/3rd of Americans will be affected by such a breach in their lifetime. All those not having access to health insurance could also be granted access to affordable healthcare if their medical records were stored on a blockchain.
If implemented correctly (ie. if all sensitive health information were stored on a blockchain), none of this data could be hacked or altered without every participant knowing about it.
Blockchain can also be used for pharmaceutical supply chain tracking, which according to some industry experts, can save around $250 billion per year by eliminating counterfeiting and reducing loss due to spoilage. For example,
- The company Mediledger is already working on several blockchain initiatives in the field of healthcare IT.
- They are currently working with The Centers for Disease Control (CDC) on a new system that will help fight the Zika virus by allowing authorized people to access specific data, such as names, addresses, and zip codes of people living in an affected area.
Pharma companies would also have a better insight into how drugs are distributed, which would give them better information about demand and how to avoid shortages.
How blockchain can solve the problem of electoral fraud
Electoral fraud is one of the most deadly problems in countries with low-security elections. Because votes are cast on paper ballots, it’s easy for someone to tamper or directly replace votes if they manage to get their hands on a few ballots.
- Blockchain can solve this issue by creating a decentralized network where votes are recorded in a way that cannot be tampered with.
- Blockchain could also make voting easier for people living in countries with extremely high government restrictions that prevent them from voting.
Although the idea would need some time to implement, it might potentially bring more stability and transparency to countries where elections are disputed now and then.
How blockchain can change the payment system
Theoretically, Bitcoin was created to reduce the costs of banking transactions by eliminating middlemen and decentralizing payments between users. However, it soon became clear that Bitcoin transactions are even more expensive than regular bank transfers.
Blockchain can still be used for cheaper transactions, but it would need to be implemented in a way that limits the number of participants who validate each block (so-called proof-of-work blockchain) or remove miners completely (proof-of-stake blockchain).
- One of the existing blockchain-based projects that could potentially change the way we pay for things online is Fluzcoin, which would compete with credit cards and other payment methods. It would allow consumers to transfer money from their bank accounts directly to merchants in a matter of seconds at zero cost.
- For example, someone pays for food in a restaurant using Fluzcoin. The payment is first converted into local fiat by the merchant’s POS (point of sale) system and then, taken to an exchange that supports Fluzcoin transactions.
- Exchanges match the order and take a 0.01% fee for each transaction. Once converted into Fluzcoins, it can be transferred to the merchant’s personal Fluz wallet, which would allow them to pay for goods in any participating store that supports Fluzcoin.
Every transaction is recorded on the blockchain and merchants are paid directly by consumers with no intermediaries involved. The result is that both buyer and seller save time and money by avoiding fees associated with credit card and bank transfer payments and merchants receive the money faster (in a matter of seconds in most cases).
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Blockchain and the manufacturing industry
Blockchain can be used to track the production of assets across the whole supply chain management, which would allow companies to stop overselling and improve customer satisfaction. A few examples are:
- Blockchain technology could also help manufacturers reduce costs by optimizing warranty claims or replacing expensive phone-based customer service with automated systems.
- Similarly, blockchain could also be used to track the production of food and other agricultural products, which would help prevent outbreaks of dangerous diseases such as E. coli or mad cow disease.
For example, Walmart recently partnered with IBM to start tracking all their pork in China using blockchain technology. This would allow them to ensure that no contaminated products make it onto their shelves.
How blockchain can revolutionize the public sector
Most countries around the world face budget crisis and increasing demand for transparency in public spending. Blockchain technology could not only decrease costs of public administration but also help to track how tax money is spent.
Blockchain could turn out to be a particularly useful tool for developing countries that lack strong database infrastructure and fight fraudulent elections. It would allow parties in the elections to count votes transparently and eliminate electoral fraud or human errors during vote counting.
For example, The Peace Innovation Foundation aims to use blockchain technology to monitor the spending of public funds in Liberia.
Blockchain and financial sector
Although cryptocurrencies got a reputation of highly volatile unregulated assets, it might be possible that governments will start regulating them in the future. If so, people who bought Bitcoins at $20K would still have to find an exchange service to cash out their money.
The problem is that none of the existing exchanges are decentralized enough to handle hundreds or thousands of transactions per second (theoretically, up to 7 transactions per second are possible on the Bitcoin blockchain). This issue is especially pressing for people who need to move large amounts of money across borders. Right now, it takes about 3 days to transfer $10K with Western Union or MoneyGram. If they used cryptocurrency instead, it would take roughly 10 minutes.
In the future, blockchain has the potential to become a foundation of a new decentralized global financial system that could potentially turn our world into a truly borderless place.
Blockchain in the coming days
Up until now, blockchain has been mostly associated with cryptocurrencies and ICOs. However, the technology is still in its infancy – it’s only starting to be used for real-world applications.
Although this could potentially lead to another “blockchain bubble,” a more sustainable approach would focus on developing a new decentralized economy that will utilize existing blockchain platforms. This approach will allow companies to first learn about blockchain technology and recognize its potential, without risking their budgets on unproven projects.
Another factor that could prevent blockchain from reaching mass adoption would be the inability of developers to solve performance issues – lately, there has been a lot of negative press around scalability problems on existing blockchains (such as Ethereum network overload).
However, these problems are not insurmountable – the most talented developers in the world are already working on this issue. For example, IOTA is developing Tangle (a ‘blockless’ protocol that could potentially solve all of the existing blockchain performance issues), and VeChain is building a ‘permission’ blockchain with high performance.
Of course, mass adoption of blockchain technology will depend on many factors – one thing is certain though – sooner or later it will happen.
The Peace Innovation Foundation aims to use blockchain technology to monitor the spending of public funds in Liberia. The problem is that none of the existing exchanges are decentralized enough to handle hundreds or thousands of transactions per second. This issue is especially pressing for people who need to move large amounts of money across borders. Right now, it takes about 3 days to transfer $10K with Western Union or MoneyGram. If they used cryptocurrency instead, it would take roughly 10 minutes.
What can we expect in the future?
So far, blockchain has proven to be something more than just a fad. Although it’s still in its infancy and we can’t even imagine all possible use-cases, there are already many possible uses for blockchain. The most exciting part is that we only scratched the surface of what blockchain can do, and it might become a new foundation of our society in the future.
For example, Walmart recently filed a patent to build an efficient delivery system that would be able to track all shipments and automatically release payments as soon as customers take products off the delivery truck.
Blockchain would help to cut costs by removing the need for third-party entities, which currently act as guarantors of payment for Walmart’s suppliers.
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